Correlation Between Adamjee Insurance and Unilever Pakistan
Can any of the company-specific risk be diversified away by investing in both Adamjee Insurance and Unilever Pakistan at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Adamjee Insurance and Unilever Pakistan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adamjee Insurance and Unilever Pakistan Foods, you can compare the effects of market volatilities on Adamjee Insurance and Unilever Pakistan and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Adamjee Insurance with a short position of Unilever Pakistan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adamjee Insurance and Unilever Pakistan.
Diversification Opportunities for Adamjee Insurance and Unilever Pakistan
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Adamjee and Unilever is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Adamjee Insurance and Unilever Pakistan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever Pakistan Foods and Adamjee Insurance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Adamjee Insurance are associated (or correlated) with Unilever Pakistan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever Pakistan Foods has no effect on the direction of Adamjee Insurance i.e., Adamjee Insurance and Unilever Pakistan go up and down completely randomly.
Pair Corralation between Adamjee Insurance and Unilever Pakistan
Assuming the 90 days trading horizon Adamjee Insurance is expected to generate 1.06 times more return on investment than Unilever Pakistan. However, Adamjee Insurance is 1.06 times more volatile than Unilever Pakistan Foods. It trades about 0.11 of its potential returns per unit of risk. Unilever Pakistan Foods is currently generating about -0.01 per unit of risk. If you would invest 2,024 in Adamjee Insurance on September 2, 2024 and sell it today you would earn a total of 2,031 from holding Adamjee Insurance or generate 100.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 69.64% |
| Values | Daily Returns |
Adamjee Insurance vs. Unilever Pakistan Foods
Performance |
| Timeline |
| Adamjee Insurance |
| Unilever Pakistan Foods |
Adamjee Insurance and Unilever Pakistan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adamjee Insurance and Unilever Pakistan
The main advantage of trading using opposite Adamjee Insurance and Unilever Pakistan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adamjee Insurance position performs unexpectedly, Unilever Pakistan can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Unilever Pakistan will offset losses from the drop in Unilever Pakistan's long position.| Adamjee Insurance vs. Habib Bank | Adamjee Insurance vs. National Bank of | Adamjee Insurance vs. United Bank | Adamjee Insurance vs. MCB Bank |
| Unilever Pakistan vs. Engro Polymer Chemicals | Unilever Pakistan vs. Lotte Chemical Pakistan | Unilever Pakistan vs. Ittehad Chemicals | Unilever Pakistan vs. Allied Bank |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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